Corbett moves ahead with privatization, taps Camelot Group to run Pennsylvania lottery

Democrats decry move, saying it shows a lack of transparency.

January 11, 2013|By John L. Micek, Call Harrisburg Bureau

HARRISBURG – The company that runs Great Britain's National Lottery has apparently been tapped to take over the day-to-day management of the Pennsylvania Lottery.

The decision to hand the $3.5 billion Lottery over to a North American subsidiary of The Camelot Group puts Pennsylvania on track to become the third state to have a private manager run the games. Illinois and Indiana are the other two.

Pennsylvania Revenue Secretary Dan Meuser, who agency oversees the Lottery, told employees Friday afternoon that the contract would be awarded to Camelot, which has run the National Lottery in the United Kingdom since its founding in 1994. It was the only company to submit a bid.

"We're confident that by combining one of the nation's best lotteries with one of the best private-sector lottery industry experts in the world, we'll end up with a win-win proposition to grow and protect Lottery profits for decades to come," Meuser told employees in an email that was obtained by The Associated Press.

In a statement released early Friday evening, the administration said it had taken "the next step in the selection process for the Private Manager of the Pennsylvania Lottery."

The administration said it had issued a "notice of award" to Camelot, providing a 20-year private management agreement for Camelot. The company has said it can generate $34 billion in profits for the 42-year Lottery. A notice of an award is not a binding contract, the administration said.

Under state procurement law, the administration said the notice will allow it to disclose contractual details to the Senate Finance Committee, which has is slated to hold a hearing Monday on the Camelot bid.

"With the issuance of this award, Secretary of Revenue Dan Meuser, Secretary of Aging Brian Duke and Pete Tartline, Executive Deputy Secretary, Governor's Budget Office will be able to address all relevant contractual procurement questions at the hearing," the administration's statement reads.

"The administration will gather information at the hearing and the near future will determine what is in the best interest for Pennsylvania seniors."

In a statement, Camelot said it was "delighted the Commonwealth of Pennsylvania has issued a notice of award for the private management of the Pennsylvania Lottery.

"We know the state has placed enormous trust in giving us responsibility for its Lottery and we intend to work tirelessly to earn that trust," the statement reads. "We are confident in our projections on growing responsibly the Pennsylvania Lottery over the next 20 years and guaranteeing the economic future for seniors programs."

The company goes on to say that is "committed to make major investments in the lottery – in its brand, in its operations and in its people."

Reaction from legislative Democrats, who have opposed the planned privatization was swift and critical.

Democrats were upset that the administration had awarded the contract, even though a state Senate oversight panel had scheduled a public hearing on it for Monday at 10 a.m.

"This shows a disturbing lack of transparency by the Corbett administration and hinders a meaningful dialogue on Monday regarding this multi-billion dollar deal," newly elected state Sen. Matt Smith, D-Allegheny, said in a statement. "The Camelot plan certainly deserves a proper examination by the General Assembly and Pennsylvania taxpayers are entitled to further information.

In an e-mail, House Minority Leader Frank Dermody, D-Allegheny, asked outgoing state Attorney General Linda Kelly to defer any review of the contract to Attorney General-elect Kathleen Kane. Kane takes office on Tuesday.

"With a legislative hearing on tap Monday and more hearings in the works, the administration's decision to barge ahead today is beyond disappointing," Dermody said. "It shows an outrageous contempt for the people of Pennsylvania."

Administration officials originally had until Dec. 31 to review Camelot's proposal to take over the Lottery, which provides funding for senior citizens program. That deadline was extended to Thursday and then extended again until Friday after a union representing Lottery employees submitted a counterproposal.

In a statement, David Fillman, the executive director of Council 13 of the American Federation of State, County and Municipal Employees, vowed to fight the contract. The union has filed a lawsuit seeking to block any privatization agreement.

"It's just incredible that the governor would ignore the General Assembly and the thousands of Pennsylvanians we've heard from who understand that this is a bad deal for our seniors," Fillman said.

By law, Pennsylvania retains ownership of the Lottery. But administration officials say they believe they are allowed to privatize its management without seeking legislative authorization.

State Treasurer Rob McCord, a Democrat who has been widely mentioned as a possible gubernatorial challenger to Gov. Tom Corbett in 2014, has warned that he may block payments to Camelot over concerns about its legality.